Thursday, Mar. 12, 2015

Corporate Bond Market
U.S. equity markets were down slightly yesterday as market participants continue to divine when the Fed will raise rates. This morning DJIA Fut -28. S&P Fut +3.80.  In currency markets yesterday the dollar hit a twelve-year low against the Euro, reaching $1.0513 versus the dollar. The Investment Grade index is +⅛at 64 7/8 - 65 3/8 as we open this morning.   Treasuries higher this morning with the 10yr last at 2.08%.  Oil still holding steady at $48.70.

In the headlines this morning are yesterdays release of the second part of the big banks stress test results. Two U.S. units of foreign banks fell short and several banks had conditional approvals.The regulatory agencies continue to impose tough guidelines after the 2008 crisis.

In response to the stress tests several banks late in the day announced increases in their dividends and new authorizations for returns to common shareholders via buybacks. Also on the back of the stress conclusion, Bank of America and Morgan Stanley are coming to market this morning with tier one hybrid preferred stock deals.

Economic Data: Retail Sales (8:30am), Initial Jobless Claims (8:30am), Bloomberg Consumer Comfort (9:45am), and Monthly Budget Statement (2:00pm) are due to be released today.


Municipal Bond Market
Munis are slightly stronger this morning after a relatively quiet trading day yesterday.  Secondary volume was weak yesterday as we continue to see all attention on the primary market.  Yesterday’s deals were met with strong demand   University of CA bonds were bumped as much as 1-6bps.  

We expect to see strong demand in the primary again today with the pricing of 200mln+ NYC GOs.  30 day supply remains strong with $12.4bln expected, the is a slight decrease from yesterdays $13.8bln

PR Benchmark GOs rallied on the day.  Bonds traded as high @ 85.00(9.70%) after trading around $83.25 (9.93%) earlier in the week.  PR benchmark GOs are up about 3.50 points from the low of $81.50 (10.16%) in late February.  Bonds rallied on news that the PR House of Representatives passed legislation to authorize the sale of $2.95bln in oil tax supported bonds.  The sale is expected to occur within the next few weeks

30 Day visible supply: $12.4bln

Deals that we will be bidding on:
3mln    Lagrange, NY Public Improvement     2016-2032    Aa2/
1mln    Longmeadow, MA    2016-2025    Aa2/
103mln    New York City G.O.s *Taxable*    2019-2029     /AA
103mln   New York City G.O.s *Taxable* Series E    2016-2026     /AA
22mln    Norwood, MA    2015-2024     /AA+
1mln   Nyack, NY G.O.s    2015-2028     /A
2mln    Westminster, MA    2016-2030


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